The BDW Trading case reported yesterday (below) follows on from a Hight Court decision from last year on the perils of vague drafting when it comes to the contractual responsibility and remit of professional services providers

In the case of Bank of Ireland v Watts Group Plc, [2017] EWHC 2472 (TCC), the Technology and Construction Court rejected a negligence claim by two banks against a quantity surveyor engaged to report on a borrower’s cost estimates for a building development. The surveying firm was engaged to provide an appraisal of the borrower’s building costs estimates. The banks’ case was that the appraisal was negligent, and that if it had been properly prepared, they would not have allowed the drawdown of the loan. The surveyors were paid only £1,500 for producing the report. The court considered that the size of the fee was good evidence of the limited nature of the service they were expected to provide: that they were not expected to do their own detailed calculations of cost, time or cash-flow, but instead had to check the borrower’s calculations. The court considered the banks’ cases to be based on an entirely unrealistic expectation of what the surveyors were required to do.

In addition to the liability point, the court also ruled that the losses claimed were not recoverable as a matter of law in any event. The surveyors had been engaged to provide information as to the construction costs, but that was just a part of the material that the banks would rely upon in deciding whether to allow the drawdown. The surveyors would only be liable in law for the financial consequences of the construction costs being wrong, and not for the financial consequences of the banks entering into the transaction.

Although this was quite a narrow set of facts, the case demonstrates the general principle of not over-estimating the extent to which one can recover losses on construction or other projects from the professional team, and the fact that the courts will not allow developers and other employers of professionals to abdicate from their own responsibilities as commercial decision-makers. It is also a reminder that, if you want to make anyone responsible for something, then you need to spell it out in the contract.